Spyglass execs said to have signed letter of intent to take over MGM

Spyglass Entertainment founders Gary Barber and Roger Birnbaum have signed a non-binding letter of intent to take over the management of MGM as co-chairmen and co-CEOs, according to people familiar with the deal.

The Spyglass executives have also been in talks with veteran Hollywood business executive Ken Schapiro to come aboard the near bankrupt studio as chief operating officer once they take the reins -- reports the LA Times.

Schapiro is partnered with Amir Malin in private media investment fund Qualia Capital, which earlier this year proposed restructuring MGM with a $500 -million cash infusion to keep the studio alive as a scaled-back operation. If Shapiro joins the new MGM, Qualia could become involved in a recapitalization of the studio after its creditors convert nearly $4 billion in debt to equity as part of a pre-packaged bankruptcy, people close to the situation suggested. Schapiro did not return a call seeking comment.

Under Barber and Birnbaum, MGM would need a large cash infusion to fund production of new movies including a planned James Bond sequel and two films based on "The Hobbit" to be co-financed with Warner Bros. The Spyglass executives intend to dramatically slim down MGM from its current 450 employees and to outsource domestic distribution of its movies to another major studio. [Update, 1:27 p.m.: Barber and Birnbaum are talking to a number of potential distributors, including Paramount Pictures where they have recently co-financed several movies including “Dinner for Schmucks” and “Star Trek.”]

Before Barber and Birnbaum can assume control of MGM, however, the studio's more than 100 debt owners and board of directors must approve the deal and file the pre-packaged bankruptcy.

The timeline is unclear though the clock is ticking. MGM's sixth forbearance on interest payments on its debt load expires Sept. 15. But, that deadline would likely need to be extended once again in order to complete the Spyglass deal.

Spyglass did not return a call seeking comment.

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